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ASIC Insolvency Reports

Small-to-medium size corporate insolvencies continued to dominate reports lodged by external administrators to the Australian Securities and Investments Commission in the 2011-2012 financial year.

According to ASIC’s annual overview of corporate insolvencies, in 44 per cent of cases, the cause of failure was attributed to poor strategic management of the business, followed by inadequate cash flow or high cash use (40 per cent) and trading losses (33 per cent).

The trend of alleged possible misconduct appears to be around insolvent trading, failure to keep financial records and breach of directors’ and officers’ duties in respect of care and diligence.